After Air India, Pawan Hans seeks suitors now as government plans exit

As the process of stake sale in the national carrier Air India heats up, the government has sought fresh bids for another prominent PSU aviation company -- Pawan Hans. The government also plans to transfer management control in the helicopter services company. 

According to the Preliminary Information Memorandum (PIM) for inviting expression of interest, "The GOI has ‘in-principle’ decided to disinvest its entire equity shareholding in PHL by way of strategic disinvestment to investor(s) along with transfer of management control." The PIM added that the Department of Investment and Public Asset Management (DIPAM) would be conducting the transaction and SBI Capital Markets Limited (SBICAP) has been appointed as the transaction advisor (TA). 

Pawan Hans Limited is a mini-ratna, category-1 Central public sector undertaking (CPSU) under the administrative control of the ministry of civil aviation (MoCA). It was incorporated under the Companies Act, 1956 on October 15, 1985, to primarily provide helicopter services for the exploration activities of Oil and Natural Gas Corporation Limited (ONGC) and to the North East Region of India. 

PHL is India’s leading helicopter company (with the largest fleet size) engaged in providing helicopter services for various purposes such as offshore operations, inter-island transportation, connecting inaccessible areas, pipeline surveillance, casualty and rescue work, charter services, VIP transportation, services under Regional Connectivity Scheme (RCS) and various other customised services, the PIM mentioned.

Pawan Hans is the leading helicopter operator in India. Image courtesy: Twitter/@TeamVTAviation

Pawan Hans also provided vital support to the Lifeline Udan mission launched by the government on March 26, a day after imposing a nationwide lockdown to curb the spread of the coronavirus.

The mission aimed at transporting essential cargo and medical supplies to the remotest corners of the country so that the travel bans did not cause panic among the public.

Special emphasis was put on the Northeast, islands and hill states. Pawan Hans had been providing helicopter services to Jammu and Kashmir, Ladakh, islands and the Northeast transporting medical cargo and patients. Till June 1, the helicopter company carried 2.88 tonnes of cargo covering a distance of 11,041 km.

The company also undertakes maintenance, repair and overhaul (MRO) services, consultancy services and foreign projects. Its real estate assets include the Rohini heliport in Delhi and helicopter training academy cum heliport at Hadapsar, Pune.

Pawan Hans also conducts training and skill development at the Pawan Hans Helicopter Training Institute (PHTI) and National Institute of Aviation Safety and Services (NIASS).  

Also read: Air India employees believe 'nobody can run airline better', prepare takeover bid

Importantly, the Rohini heliport would not be a part of the proposed transaction and would be demerged from Pawan Hans Limited, the PIM said, while adding the proposal to let the successful bidder use the Rohini heliport (currently being used by PHL) for a period of 10 years is under consideration. 

PHL is also currently using other hangars and bases located at Juhu (Mumbai), Guwahati, Rajamundary, Jammu, Srinagar, Agartala, Kullu, Shimla, Kangra, Dehradun and Diu on lease from the Airports Authority of India (AAI).

As of March 31, 2020, Pawan Hans had 42 helicopters in its fleet comprising three MI-172 heavy-duty helicopters, 17 Dauphin N, 14 Dauphin N3 and one Dhruv medium helicopters, three Bell 407, two Bell 206 L4 and two AS350B3 light single-engine helicopters. Its authorised capital as on March 31, 2020, was Rs 560 crore and paid-up share capital was Rs 557.48 crore. The government owns 51% of the stake in the company, while ONGC holds the remaining 49%. 

The ONGC had also decided to offload its entire stake to the successful bidder at the same discovered price per share and on same terms and conditions as agreed by the government, except for the rights available exclusively to the government. "The successful bidder, as identified by GOI, will have the option to buy entire ONGC stake of 49% in PHL on similar price and terms," the PIM stated. 

The deadline for the submission of EoIs has been fixed at January 19, 2021, and the shortlisted bidders would be notified by February 17, 2021. The last date for submission of queries on the PIM is December 22, 2020.

The govt is looking to offload its 51% stake in Pawan Hans. Image courtesy: Twitter/@PawanHansLtd    

The PIM also forbids the successful bidder from retrenching or terminating the services of any permanent employee for a period of one year from the date of consummation of the proposed transaction, other than for necessary reasons. In the case of a reduction in employee size (including retrenchment or termination), the successful bidder would have to ensure that voluntary retirement is provided to its employees for a period of one year on terms no less favourable than those provided by the Department of Public Enterprises guidelines of May 5, 2000, and modified subsequently. 

As on July 31, 2020, PHL employed 686 people (363 regular and 323 contractual employees), including 51 executives, 127 pilots, 99 aircraft maintenance engineers, 141 technicians and 268 other technical and non-technical staff.  

Additionally, 25 contractual labourers are working with Pawan Hans and the company is paying them according to the minimum wage by the direction of the Bombay High Court.

Also read: With Blade choppers, cut the jam, fly from Mumbai to Pune in 45 minutes

The PIM also said that for a period of one year, the successful bidder must not sell, transfer, mortgage, lease (save and except for any operating lease in the ordinary course of business), pledge, hypothecate any assets nor create a charge or encumbrance or create a lien on any assets of the company, nor any action shall be taken or decision made to this effect, except in a few specific situations.

The successful bidder shall ensure that the company continues its business of providing air transport services on a going-concern basis for a period of three years and ensure that the company does not cease to conduct the said business or liquidate or wind-up the company during the said period, the PIM added. 

The government had already made two unsuccessful attempts to sell Pawan Hans. The company had total revenue of Rs 376.82 crore and total expenses of Rs 384.94 crore in FY20. It had total assets worth Rs 1,303.07 crore and total equity and liabilities of Rs 1,303.07 crore in FY20. PHL has an outstanding debt of Rs 15.93 crore as on March 31, 2020.